No Rate Cut in May: Home Owners

More than one in every two home owners expect the Reserve Bank of Australia (RBA) to leave the official cash rate unchanged for a fifth consecutive month, a national survey has found.

The poll by leading mortgage broker Loan Market which asked ‘What action do you think the RBA is going to take at its March meeting?’ found that 53 per cent of respondents anticipate the current cash rate to be maintained at 3 per cent.

Loan Market spokesperson Paul Smith said that even with the highest level of unemployment since November 2009 and the slowest rate of home loan growth in 36 years there were positive factors in the economy that were giving home owner’s confidence.

“Despite a weaker than expected inflation rate, home owners still aren’t convinced the RBA will see the need to lower the cash rate,” Mr Smith said.

Mr Smith said 39 per cent of the 436 home owners surveyed predicted that the RBA will lower the official rate by 25 basis points on Tuesday.

“There have been some positive numbers coming out of the real estate industry – auction clearance rates are showing that those who want to purchase or sell have a heighten ability to do so” he said.

“Interest rates are currently at historic lows and fixed interest rates continue to fall which indicates some lenders are anticipating further rate cuts in the future. Home owners should make sure they’re taking advantage of these low rates so that they can offset any other rising expenses,” he said.

Mr Smith said the percentage of home owners predicting no rate cut dropped 4 per cent from the same survey in April and was the same result of the March survey.

“There’s clearly evidence that home owners are paying attention to the key factors that influence the RBA’s rate decision and can correctly predict the monthly rate decisions.”

Loan Market survey results:

What action do you think the RBA is going to take at its March meeting?